Output Rises in June, Ending Strong Quarter

A U.S. industrial rebound from a slump last year caused by global financial woes remained on track in June with no sign of worrisome production bottlenecks, a Federal Reserve report shows. Output by U.S. factories, mines and utilities gained 0.2% in June, the same as in May, for a fifth straight monthly increase. During the second quarter, production surged at a 3.9% annual rate, triple the first quarter’s 1.3% advance and the strongest three months since the last quarter of 1997. Despite steadily rising output, businesses ran at a slightly lower 80.3% of their maximum capacity in June, down from 80.4% in May. That was well below the 85% level that might trigger concern about inflation risks and left ample room to safely boost production further. Strong second-quarter industrial output contrasted sharply with last fall, when U.S. manufacturers were still feeling the brunt of a slowdown in crisis-stricken Asia that has now lightened substantially. In the 1998 third quarter, output advanced only 0.9%, the weakest since the six months spanning the final quarter of 1990 and first quarter of 1991. A separate report, issued to paying customers by the University of Michigan, showed its consumer sentiment survey eased to 106.2 in July from 107.3 in June, still above the average of 105 for the last year and a half.